1991 (4) TMI 413 - HC - VAT and Sales Tax

Summary

Issues:
1. Entitlement to deduction of sales tax collected by the dealer.
2. Interpretation of Rule 9(1) of the Kerala General Sales Tax Rules, 1963.
3. Compliance with legislative provisions for deduction of sales tax.
4. Judicial precedent on the meaning of "collected as such" in sales tax deduction cases.

Analysis:

The judgment by the Kerala High Court dealt with the issue of whether a dealer is entitled to a deduction of sales tax collected. The case involved an assessee under the Kerala General Sales Tax Act, 1963, conducting business in molasses for the assessment year 1979-80. The assessing authority and the first appellate authority denied the deduction as the tax collected was not separately shown in the sale bills. However, the Sales Tax Appellate Tribunal found that the sale price included sales tax, as indicated in the sale bills and the dealer's ledger. The Tribunal held the dealer entitled to the deduction claimed, citing a previous similar decision. The Revenue challenged this decision in revision.

The Court considered Rule 9(1) of the Kerala General Sales Tax Rules, which allows deduction of sales tax collected if shown separately in the bills. The Court highlighted that the purpose of the rule is to exclude sales tax collected from the taxable turnover. Referring to a Supreme Court decision, the Court emphasized that the rule aims to provide relief to dealers where it is evident that sales tax has been collected, even if not separately shown in the bills. The Court rejected a literal interpretation of the rule, stating that the intention is to discern whether sales tax has been collected based on the records.

In light of the evidence presented, including sale bills indicating "including sales tax" and proper bifurcation in the accounts, the Court upheld the decision of the Appellate Tribunal. The Court emphasized that the amount collected represented both the price of goods and the tax payable, making it clear that sales tax had been collected. The Court also referred to a similar case where the court held that evidence indicating collection of sales tax, apart from sale value, warrants deduction. The Court found no reason to interfere with the Tribunal's decision and dismissed the tax revision case.

Additionally, the Court referenced a judicial precedent from a Patna High Court case, emphasizing the need for evidence indicating collection of sales tax for deduction purposes. The Court concluded that the present case, with sale bills explicitly mentioning "including sales tax," had a stronger foundation for allowing the deduction. The judgment highlighted the importance of considering the substance of transactions and the legislative intent behind sales tax deductions in such cases.